## Facts

- Iris Fengler, individually and derivatively for Stationers Supply Co., Inc. (“Stationers”), agreed to sell 60% of Stationers’ stock to Numismatic Americana, Inc. in December 1986.
- Fengler alleged that an acquiring representative promised a $50,000 investment, a $1,100 weekly salary to Fengler, payment of Stationers’ outstanding checks to creditors, and an audit to restore Stationers’ financial health.
- The written agreement executed on December 24, 1986 included terms for an audit, the $50,000 investment, and Fengler’s weekly salary.
- At signing, Numismatic’s principals were represented by attorney Stuart Bochner and his firm; Fengler was not represented.
- Fengler alleged she was told Bochner would represent the interests of all parties and that obtaining separate counsel immediately before Christmas would be difficult.
- Fengler alleged that within two weeks of closing, defendants removed Stationers’ inventory, records, and furnishings and failed to make promised payments and investments.
- Plaintiffs sued for misconduct (including fraud and breach of duty) and sought interim relief to protect Stationers pending litigation.
- The district court issued a preliminary injunction barring all defendants from engaging in any business transactions concerning Stationers, without an evidentiary hearing and without findings of fact.

## Issues

1. Whether a preliminary injunction restricting defendants’ business dealings could be issued without an evidentiary hearing where material facts were disputed.
2. Whether the injunction was invalid because the district court failed to make findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52(a).

## Decision

- The Second Circuit vacated the preliminary injunction and remanded.
- The court directed the district court to hold an evidentiary hearing on the request for preliminary injunctive relief.
- The court held that issuing such broad interim restraints without a hearing was improper given disputed facts and potential credibility disputes.
- The court also held that the injunction could not stand because it was unsupported by Rule 52(a) findings, preventing meaningful appellate review.
- The court did not decide the merits of the underlying fraud, fiduciary-duty, or attorney-conduct allegations.

## Legal Principles

- When material facts are disputed and credibility determinations may be necessary, a district court ordinarily must conduct an evidentiary hearing before granting a preliminary injunction.
- Federal Rule of Civil Procedure 52(a) requires findings of fact and conclusions of law when a court grants or denies an interlocutory injunction.
- An injunction entered without Rule 52(a) findings is subject to vacatur because the absence of findings impedes appellate review of the preliminary-injunction standard (including irreparable harm and merits-related showings).

## Conclusion

The Second Circuit set aside a broadly worded preliminary injunction that had been entered on an undeveloped record and without Rule 52(a) findings, requiring an evidentiary hearing and articulated factual and legal bases before similar interim relief could be imposed.


Fengler v. Numismatic Americana, Inc., 832 F.2d 745 (2d Cir. 1987)